Coping with tough times

[Jon Savage]

I've noticed that a number of places I frequent have lately not been nearly as busy as usual. Restaurant owners I know attribute this to the economic slowdown that we seem to be experiencing in the US of late. This coupled with significant increases in food costs must make things more challenging than usual in an already challenging industry.

One nearby sushi place suddenly put up a banner announcing a "New more economical menu".

A favorite Bistro raised prices across the board with steak frite now costing $24 rather than $18.

A local italian place I like to eat at has implemented several changes-

Prices increased across the board.

The first basket of bread is free, subsequent ones are $2 each. Quantity of bread/butter in the basket has been halved as well.

At least one recipe change (shrimp pizza using far fewer shrimp than before chopped instead of whole, still tasty though as most Pizzas in the US seem well... overtopped anyway).

The above examples are from medium end ish SoCal restaurants; I don't do enough fine dining to really have been able to observe changes at the high end places.

I wonder what other coping mechanisms are being used or have been observed and how both customers and restaurant owners feel about them.

Personally I don't have a problem with paying for bread. I do wonder why I'm not seeing smaller portions of food being served though. Since many places serve such huge portions that would seem to be an ideal way to economise without having to substantially increase prices.

Edited May 8, 2008 by 6ppc (log)

[Jakea222]

we are bumping numbers the next week - thinkgs are gonna get strange... You ain't seen nothing yet.

[vloglady]

My friend and I had dinner last week at Gandhi in Manhattan. we've eaten there many times in the past, food is very good.

The bowl of rice given to us, two adults, was about 2/3 cup for both of us. I know about the rationing of rice, but that was ridiculous! We asked for some more, don't know if we got charged for it.

Susan

[chefpeon]

Our sales are WAY down from last year......the price of flour forced us to raise our wholesale bread prices, and we actually lost accounts because of it. People are now more reticent to buy artisan breads and because sales were down so low, our accounts dropped us.

Our retail cafe is VERY slow. I will be very curious to see our numbers after this Mother's Day weekend. I made a lot of fancy cakes hoping for those last minute impulse sales. Got my fingers crossed.

[Toliver]

Our sales are WAY down from last year......the price of flour forced us to raise our wholesale bread prices, and we actually lost accounts because of it. People are now more reticent to buy artisan breads and because sales were down so low, our accounts dropped us.

Our retail cafe is VERY slow. I will be very curious to see our numbers after this Mother's Day weekend. I made a lot of fancy cakes hoping for those last minute impulse sales. Got my fingers crossed.

←

Sorry to hear that business is so slow but it's a sign of the state of the economy, of course. Interestingly enough, Walmart & the Discount Club stores are currently doing very well because of the public perception that these stores offer a good value for a low price.

I don't know what your target clientele is for the café but have you tried similar tactics? For instance, introducing a daily combo special at a good price? Even if it's a loss leader, it can bring customers in through the doors. Actually, it doesn't even have to save the customer that much money. If they perceive that it's a good value (advertising/signs can help stress this), it can still work in your favor. It's the perception of saving money that's at work here.

I'm not sure if this will be enough these days. As you know, a lot of people are cutting back on eating out so it's going to be a struggle to keep bringing them in for the next year or more.

I'm sure you have signs posted about the Mother's Day cakes. I'd suggest street-side/sidewalk signage, if possible. The impulse buyer is who you're after at this point in time. Advertising the cakes will help bring them in.

[Jakea222]

You have not seen "nothin'" yet. The numbers are going to get worse. My suppliers said that look for another increase on simple things 5-6% on top of the 9-13% already. I have had 3 bakers in the club this week offering services and bringing in amazing samples, but for the most part we are staying loyal to our providers right now. We are paying for fuel delivery costs right now 7 bucks a pop on top of the increases and we order a lot. We are going to work on doing certain days of the week to cut down on that. But you californians know gas is terrible and people are staying home. No joy riding for me right now

[JeanneCake]

Our sales are WAY down from last year....... I will be very curious to see our numbers after this Mother's Day weekend. I made a lot of fancy cakes hoping for those last minute impulse sales. Got my fingers crossed.

←

Yesterday I got a call from the gourmet store (at 4:30 no less!) saying "I know I told you 2 Princess cakes, 2 Lemon Delice, 2 Decadence, 2.... but listen, I don't have any orders and I don't want to get stuck. I want to pull back my order." At 4:30?! This was stuff due to be delivered Saturday morning. So I told her she had to take the occasion cakes and Princess cakes. (it was all I had done then!). But I was really looking forward to the rhubarb tarts....

It will be a long, hot summer. Here's hoping all of us survive.

[Jakea222]

good luck we pulled an order late a few months ago and our guy said no problem - not sure what he waould say today as things are bad - but he knows we call him and him only and we will use him even though many have sampled us by stopping by - I wish all of us luck in the coming months as I still think the worst is yet to hit - Strap in and keeps your hands and arms inside the ride beause we are going on a good one then next 6 months

[sherrid]

I'm in Australia and we haven't really seen any major effects yet, although we have had a lot of interest rates and inflation which is affecting a lot of people so there are less diners around.

I think making "peasant" food gourmet is the key. I know it's had a bit of a resurgence lately and I think it's wise for many restaurants to use this as a way to save $ and make profit.

[duck833]

Hang in there, relief is on the way!!!

I have total faith in the american farmer to chase the highest producing crop and kickup production when they can make a buck. My ag clients had a great year in 2007 and are planting high priced crops like there is no tomorrow. They will overproduce like normal and the supply will drive prices down.

[doctortim]

In Australia here, as a customer rather than a business owner.

I was chatting with the guy I buy cheese from and his view is that things aren't too bad yet. He was expecting to do quite well this Mother's Day as people avoid the increasing expense of eating out and decide to cook for themselves, but most restaurants are booked out and he hasn't seen as many customers as he expected.

[chefpeon]

I don't know what your target clientele is for the café but have you tried similar tactics? For instance, introducing a daily combo special at a good price? Even if it's a loss leader, it can bring customers in through the doors. Actually, it doesn't even have to save the customer that much money. If they perceive that it's a good value (advertising/signs can help stress this), it can still work in your favor. It's the perception of saving money that's at work here.

I'm not sure if this will be enough these days. As you know, a lot of people are cutting back on eating out so it's going to be a struggle to keep bringing them in for the next year or more.

I'm sure you have signs posted about the Mother's Day cakes. I'd suggest street-side/sidewalk signage, if possible. The impulse buyer is who you're after at this point in time. Advertising the cakes will help bring them in.

Well, we've certainly done all that and more.........

after this weekend, I can definitely say that sales are down down down.

I mean, I can't blame the consumer, since I'm one too.

I tried extra hard this year to entice people into those last minute sales, but it just didn't happen.

I can understand.....but I'm still disappointed.........

[Loosecanon Dolph]

A favorite Bistro raised prices across the board with steak frite now costing $24 rather than $18.

←

According to Marco White, he kept Harveys afloat during the recession of the 80's by raising his prices, instead of lowering them or changing portion sizes (something he claims all his competitors were quickly doing) because he said rich people are still rich in a recession, and they can afford price increases, and they are going to NOW be ones target market. By lowering prices or changing portion size, in a way you are trying to deceive the customer/devalue your food, and anyone with half a brain will see right through that, but if you raise the prices people will see that as an honest response to a tough economy, especially coupled with a rising food crisis. Anyway he coasted successfully through those years, and as most chefs know Marco White is something of a restaurant genius.

[Jon Savage]

A favorite Bistro raised prices across the board with steak frite now costing $24 rather than $18.

←

According to Marco White, he kept Harveys afloat during the recession of the 80's by raising his prices, instead of lowering them or changing portion sizes (something he claims all his competitors were quickly doing) because he said rich people are still rich in a recession, and they can afford price increases, and they are going to NOW be ones target market. By lowering prices or changing portion size, in a way you are trying to deceive the customer/devalue your food, and anyone with half a brain will see right through that, but if you raise the prices people will see that as an honest response to a tough economy, especially coupled with a rising food crisis. Anyway he coasted successfully through those years, and as most chefs know Marco White is something of a restaurant genius.

←

I'm looking at this from a US perspective where many if not most restaurants that are not in the high end fine dining class tend to radically over portion IMHO.

[Jakea222]

The formers are going to drive down prices....well that is a new one on me - corn crops - wheat are at very high cost right now as flours have gone through the roof. Not to mention the money that they get for NOT growing. The midwest floods are hurting the market right now as crops in that area as well as transportation through that area is costing more ----with that being said

I have had several bakers in here even since my last post trying to get commercial business. We have used a couple of them - BUT some are not producing the quality - but it did get them some business with us. The walmart tactics will make you look cheap ---

[coastie]

We are really considering closing. My margins are shot. I don't think my customer will pay more - they will just eat less. I already see that. The concept of the rich stay rich works to a degree. I have an afluent customer base, for the most part, even they are tightening their belts. Its really depressing. Put almost 9 years into my place - its a "locals fav", my customers will kill me.......its sad but - Id be better off working foir someone else. Rising costs - lack of skilled labor , Im over it I guess - not cooking thats part of me. But I don't see this getting better - catching up to itself for a long time. I hope a lot of independents are left when it does equalize, I worry all that will be left is chains.

Edited June 18, 2008 by coastie (log)

[Jakea222]

I am sorry - nut the real facts are coming and they are not pretty. Knowing the time to quit whie you still have is a good thing. It is when you bleed too long and start selling off assets that hurt down the road....another time and another place - keep your dream , may put on hold after 9 yrs ---

[sugarseattle]

I ordered spaghetti and meatballs at a place I normally go and got just TWO meatballs, as opposed to the 3 or 4 I usually get. Actually, I rather like the idea of smaller portions which means I will eat and likely waste less.

I think this is an interesting time for food especially in the US. We've been used to paying much less for our food than other countries and I strongly believe that abundance has made us a little tubby around the waist-line. (It's sort of ironic that "waste" and "waist" sound the same). I think the higher cost of food is making me think twice about what I put into my body. I am buying produce more often and not throwing as much away. That is a good thing in my opinion.

Yes, I just opened my bakery 6 months ago so of course I am scared about how this will affect business. My coffee vendor just sent a notice that they are raising their prices 9%! My husband hasn't gotten a raise in 2 years, so yes, it is important that I keep giving myself a paycheck.

I am very interested in seeing how this huge paradigm shift in how we see food will play out. I think this is a very interesting time to be in the food business.

[Chris Amirault]

In the last few weeks, Nation's Restaurant News has been reporting on businesses seeking to maintain relationships with customers if for smaller portions and lower prices: $1 coffees at Starbucks, smaller plates at Au Bon Pain and Friday's. There have also been stories on delivery services, renegotiating leases, and other approaches, all of which feel a bit like suggesting umbrella use during a hurricane....

[Jakea222]

I can say that the customer service has gone up with our vendors - we are all taking a hit and will do what we gotta do to get through - is it gonna get worse - yep - is the flooding gonna hurt us - yep - is the gas and delivery fees gonna keep going up - yep - prices are gonna keep going up and we are all gonna have to deal the best way we can and get used to the costs - I can only keep my fingers crossed for all of us right now as my retirement accounts continue to lose every quarter and my cahs on hand is not as much as it used to be